But doesn't the 'Pro 2' Argument state that Newspapers and Credit Agencies endorse Proposition 2?

A:

In the Voter Guide -- dateline July 22, 2014 -- the proponents claimed that various newspapers and rating agencies endorsed A RAINY DAY FUND. Note that they DIDN'T say PROP 2 and its related legislation.

Far from endorsing Prop 2 (formerly Prop 44 until 8/12/14) and its supporting legislation, many organizations had expressed major concerns. See below for the FACTS regarding the SPECIFICS of Prop 2 when the Voter Guide information was published.

The Sacramento shenanigans, forcing school districts to shed reserves, brought the following from the press and rating agencies:

On May 11, 2014, the Chronicle lauds the prudence of a Rainy Day Fund. Then, when politics intervene ...

On June 18, 2014, sighs over “a rainy day fund riddled with holes and caveats,” and says the switch is “all the worse because it comes with the blessing of Gov. Jerry Brown, a self-proclaimed apostle of fiscal restraint.”

Standard & Poor’s - The original analysis is linked here and is entitled, "The Challenge of Establishing a State Budget Reserve," and well worth reading.

On May 6, 2014, the S&P report actually says that, “When it comes to reaching a legislative supermajority on fiscal matters, California has a weak track record … Sorting through these tensions, as well as refining the measure in light of the technical issues the LAO has raised, represents a test of sorts for the state. But if the legislature succeeds in assembling the consensus necessary to move the measure forward, it could mark another step in California’s ongoing journey toward a more sustainable fiscal structure.” (Note the selective – and erroneous – quote in the proposition argument.)

On July 4, 2014, S&P says “In our view, statutory limitations on reserves may alter the financial management landscape for California school districts that have a consistent track record of maintaining what we view as very strong reserves. Very strong reserve levels contribute to a district's fiscal capacity to absorb episodes of unanticipated fiscal strain and, thus, affect its rating level.” Read more in “Recent Changes To A California Law on School Districts’ Reserves Result In Neutral To Negative Credit Implications” here.

On May 8, 2014, the Times included an opinion piece by Jon Healey, “Gov. Brown patches leaks in his original rainy-day fund plan,” that stated, “This version addresses the glaring weakness in Brown’s earlier proposal, while also doing more to promote a culture of saving in Sacramento year-in and year-out.”

but then on June 17, 2014, the Editorial Board stated (in “An ill-considered mandate on school funding”), “…some things haven't changed, most notably the maddening practice of inserting controversial policy changes at the last minute with little or no public debate. This year's Exhibit A: an ill-considered mandate that could force local school districts to spend down most of their reserves in one fell swoop.”

It continues, “the measure lawmakers adopted is flawed in both letter and spirit. It would require districts to spend down any reserves above the cap — including amounts held for future textbook or technology purchases, as well as funds raised from local parcel taxes — the year after the state starts building its new rainy-day fund for schools, regardless of how little that fund may hold. Proponents note that the cap on local reserves is two to three times the minimum amount the state requires districts to keep, but that generally translates into only a few weeks' worth of payroll.

And concludes, “… the real rationale seems to be to stop districts from being cautious about the state's boom-and-bust revenues and from saving money before they spend it. It pushes the state in exactly the opposite direction of the Brown administration's laudable efforts to take fewer fiscal risks and to transfer decision-making authority from the state to the local school boards chosen by voters.” (emphasis added)

Moody’s: On May 19, 2014, Moody's says, “California Plan to Save for a Rainy Day is Credit Positive.” The fund reflects the state’s new emphasis on building reserves to cushion its finances from economic downturns.

Raised California’s credit rating on June 25th … then lowered Coachella Valley USD’s on July 11th, citing that, among other things, “The negative outlook reflects the recent weakening of the district's finances and the near-term challenge the district will face in regaining balance, managing liquidity and rebuilding its fund balance.” Imagine 500 districts in the same situation.

On May 17, 2014, the Editorial Board said, “Thursday, the Legislature unanimously passed a rainy day fund measure — sponsored by Sen. Anthony Cannella of Ceres — to set aside 1.5% of the general fund each year to protect taxpayers against catastrophic budget deficits.”

It did NOT say that it WILL protect taxpayers against those deficits! Just that protection is the purpose of setting aside the funds. (Yet another inaccurate quotation!)

On May 14, 2014, the Editorial Board said, that agreeing on a rainy-day plan was an important step toward fiscal discipline, though, interestingly, also quotes Darryl Steinberg as saying that suggestions that Brown has to stop legislative democrats from overspending is “a lot of BS.”

And on June 16, 2014, Dan Walters (grand old man of Sacramento journalism) wrote, “This year’s poster child for budgetary sneakiness is a brief passage in a lengthy trailer bill dealing with education finance. Last week, at the last possible moment, language putting a cap on financial reserves that local school districts can maintain popped to the surface ... it quickly became evident that Gov. Jerry Brown and Democratic legislative leaders were doing the bidding of the powerful California Teachers Union and other school unions. ... Almost certainly, it was to counter an implicit threat by the unions to oppose the rainy-day fund measure that they fundamentally dislike as a de facto spending limit. Limiting school district reserves could compel them to place more money on the table in contract negotiations. School district trustees and administrators began hammering lawmakers not only about its sneakiness, but the evident conflict between the proposal and Brown’s frequent proselytizing about local control, which he calls “subsidiarity.” ... The issue got its first public airing Sunday in the Senate Budget Committee just hours before a midnight deadline to enact the budget ... Brown’s deputy budget director, Keely Bosler, and her education aide never offered even a thin rationale in response to questions and criticism, just repetitively describing how the limit would work and insisting its impact would be scant. ... “The policy makes no sense,” Sen. Richard Roth, D-Riverside, said. “Why the rush to enact it right now?” ...No one answered…”

And, on June 15, 2014, an article “Lawmakers approve California budget under Looming Deadline” by David Siders and Jeremy B. White, quotes Sen. Marty Block (D-San Diego), “My main concern truly is with the process. This is clearly a major policy deviation from the way we’ve done business, and this is something that could have been discussed over the last several months.” Sen. Hannah-Beth Jackson (D-Santa Barbara) is quoted as saying, “To say that this process is inconsistent, I think, is somewhat of an understatement and is the politest word I can think of.”

In short, Proposition 2 – rather than protecting citizens from our politicians – is giving politicians one more way of circumventing public process and local control. Their disdain for accuracy and truth is illustrated above.

Take a step in stopping a political machine that harms education under the banner of saving it. Vote NO on Prop 2.